Cyprus "Uncharted Territory" Sets Sell-Side Scrambling

Tyler Durden's picture

While offering up some 'hope' that the unprecedented tax on Cypriot deposits will not spark "massive" contagion (due to the ECB's "promise"), it appears from this summary of sell-side opinion on this weekend's European developments that the sell-side is starting to panic... it would appear the European credit markets, that have been so skittish in recent weeks (especially the financials), had it right all along? whocouldanode? It seems, as the head of the European Parliament's Economic and Monetary Affairs Committee, no less, said: "The lesson here is that the EU's single-market rules will be flouted when the Eurozone, ECB, and IMF say so."

Via Bloomberg,

Holger Schmieding, chief economist at Berenberg Bank:

  • Optimistic this will not spark “massive” contagion thanks to ECB promise that it will do all it takes to keep reform countries in the euro
  • The risk that this “could backfire is not zero”
  • We are in “unchartered territory again”

Charles Diebel, head of market strategy at Lloyds Banking Group Plc:

  • Given that the agreement was announced after banks in Cyprus had closed for the weekend the chance of capital flight is “unlikely” as it’s already too late
  • The tax will “increase nervousness” and pressure peripherals at least in the short term
  • Could pressure the euro

Alberto Gallo, head of European macro credit research at Royal Bank of Scotland Group Plc:

  • Cyprus a special case with bank assets of EU125b over 7x the size of the economy
  • Unique also as Cypriot banks have only EU2b of bonds outstanding, making bondholder bail-in ineffective
  • Possible that some small periphery banks may suffer deposit outflow to larger firms

Annalisa Piazza, a fixed-income analyst at Newedge Group:

  • This will spread “some panic” across the euro area periphery which could result in capital outflows
  • Will have impact on concern that similar measures could be applied elsewhere
  • Some weakening of the euro cannot be ruled out



And from an 'insider' - Sharon Bowles, head of the European Parliament’s Economic and Monetary Affairs Committee, said:

  • Levy on deposits agreed under Cyprus bailout deal means circumventing EU deposit guarantee laws
  • “It robs smaller investors of the protection they were promised,”
  • The lesson here is that the EU’s single market rules will be flouted when the Eurozone, ECB and IMF say so,”

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DoChenRollingBearing's picture

My BAC ATM card just worked OK, $500 OUT of the bank.

Prepare, starting yesterday!

IridiumRebel's picture

Awesome! I strongly urge you to move your money away from BAC.

DoChenRollingBearing's picture

Good advice!  I have my assets scattered around, don't worry about me.  Look out for you and yours.  AmmOK from the southern front!

enloe creek's picture

screw bitcoin, it is not a currency! you can't convert it or obtain it, it is a joke


Stackers's picture

Everyone have their towels ?

jeebus's picture

Wrong on all accounts. I've been getting bitcoins since they were $15. Fiat money is not a currency. You can easily keep 80% of your money in bitcoin if you are so inclined, and many people are. If you wanted bitcoins you could have them in a few days at the very most if you just use conventional methods.

sbfeibish's picture

I think Peter Schiff does_business/keeps_money_with with BAC because they're "too big to fail" (TBTF)

JamesBond's picture

But you started with $535...



Ancona's picture

So this is how it starts....

Gold, guns, beans and bullets. I'm just 'sayin....

DoChenRollingBearing's picture

+ 1

Yes, yes, yes, and yes.  Heard ya!


Or you can just buy bearings...  "Customers and Bearings"

Winston Churchill's picture

Just ordered some more beans myself,next stop some more shiny.

Just wish they could have waited a couple of months as I'm still liquidating some assets

here, and there, plus hanging on for my last royalty check in pounds.

Lore's picture

Millions of preppers all eating beans at once?  Maybe we'll get a chance to see if Al Gore was right after all.

grid-b-gone's picture

I started moving out of the bailout banks in 2008 and today own everything 100% except a piece of rural land. Now 4% debt-to-net worth - easily paid off, even during a crisis.

Many on ZH and other blogs think they will pay off debt with inflated dollars. Inflation targets are to help banks, not individuals. The Cyprus action is clear evidence that no anti-individual idea is being rejected. The middle class is now thought of as a commodity - feeder fish easily mistaken as equals swimming among the focal species.

The individual can easily win. Own outright everything you want to keep. Debt puts someone else before you when the ownership of your assets comes into question. 


nightshiftsucks's picture

If they tried to do that here the whole govt would be recalled.

honestann's picture

Only if you own things they can't tax.  Nothing stops the predators from raising property taxes from 1% to 3%, or 3% to 9%, or 9% to 27%, etc.  Nothing stops the state and federales from adding their own property taxes too.

The only thing that is safe is real, physical assets that they cannot see or find.  And if these are real, physical productive assets (meaning assets that help you produce additional physical goods), then you are way ahead.

Probably the best investment is to pick up stakes and move to some backwater nation where the government is just a bunch of clueless keystone cops, and more-or-less limited to screwing around in their capital-city or major cities.

The fact is, one should never live in a place where they are considered "a citizen", because "citizen == slave" in the eyes of every pack of predators-DBA-government.  However, in a majority of countries, non-citizens are generally considered to be, and generally treated as "welcome guests" who spend outside money into their economy.

The point is, move to where you are not considered a citizen.  That's often the single best investment a human being can make.

Taffy Lewis's picture

Right on, honestann.

What you say supports my move in the near future to a SE Asian "backwater country".

I'll rent my house out here in the Midwest US and comfortably pay the mortgage, insurance, etc. and it will be a safety valve if my SE Asia plan falls through.

tip e. canoe's picture

clif's recipe for black bean soup

cook, eat, and be well, testing time rushes ever closer.

WTFRLY's picture

How could anyone down-vote that?

hugovanderbubble's picture

Time to Get Long Exposure to Rare Earth Metals Companies (physically) for next cycle -2014-2022 and sell Real Estate REITS

DoChenRollingBearing's picture

I follow the rare earth sector.  You may very well be right.  Too many small players ups the risk right now though, IMHO as I am no expert.

Larry Dallas's picture

It's all happening so fast but seems like slow motion. Like a car wreck.

Next, someone with a 3" blade will (hijack a commercial jetliner as planned and attempt to fly it into Las Vegas, White House, etc.) because they are now "allowed to" and we will be a full police state.

What will the sheeple who live paycheck to paycheck do who eat fast food?

Emergency Essentials order being placed tonight. Shit is getting real.


Lets Buy The Dip's picture

yes, everyone keeps on going on about how good the market is right now. But maybe this is the catalyst they need!!

Also has anyone seen what happened on OPEX friday. I know I must not be the only one seeing what happened on the nasdaq daily charts, and other have been blogging about it. 

nasdaq daily volume - nasdaq daily chart and daily volume warning

have a look at that chart above, you can see that something dynamic is happening to the market. The smart money was not only selling on friday, they were like lemmings hopping out as the selling volume was higher than average and it is telling me the smart money were getting out in front of some bigger news. They always know what is coming before us little lemming traders. 

So even though we are reading this bad news over the weekend, the charts, and the news are all adding up to something...well.....not so good. 

Also the market breadth is still overbought, so we are getting like a tripple confirmation that the market is about to sell off. All it needs now is some bad news, which we are getting, and it could be GOODNIGHT IRENE if you know what I mean. 

Now that opex is over, it could spell trouble for the market, and they love to bring in bad news just after opex. Fancy that. IT all seems to be mysteriously adding up. 

falak pema's picture

Markets can panic but they have nowhere to go; running to USd/WS is not a solution either.

Its now and nowhere...

THX 1178's picture

If the bank run spreads, central banks will have to inject these banks with cash, inflating the currency. If it inflates too much, it will cause a flight from the currency into real goods (even if it means going to the store and dumping dollars to buy beans & rice.) PMs are a real good-- jacking the price up. People who have silver contracts will ask for the real stuff, exposing the bankrupt and manipulated custodians. This is how currencies die.

francis_sawyer's picture

Has anybody told Obama yet that his $2 Nassau just went to $20?

centerline's picture

A good deal of the capital out there doesn't realize it is on borrowed time - and doesn't have a choice anyhow.  It will slosh around seeking safe haven.  Big cash needs deep markets.  More like a hot potato game it seems.

swissaustrian's picture

I can't imagine that they (Eurocrats, IMF, ECB) are that stupid not to know that this is going to scare depositors all over the peripheral countries. So the question is:

Why do they want another massive capital flight to the core?

debtor of last resort's picture

Maybe they try to force a European deposit guarantee for all euro countries together.

reload's picture

Fiscal union  back on deck--thats the game plan here.

RazvanM's picture

1. Testing reactions in a smaller country.

2. Playing the "plunge the market then raise it again" game for the well connected insiders.

PS. I have a feeling that the 10% haircut on the deposits over 100k euros was negociated with the Russians. It's like a fee for cleaning Mafia money. So:

3. The event will be forgotten in a couple of weeks - if the Cipriots are nice and easy.

Just my 2 euro-cents.

rehypothecator's picture

Isn't it just the most remarkable coincidence that the haircut was decided RIGHT AFTER QUAD WITCHING DAY?!  I mean, what are the odds of that?  All those options that JUST HAPPENED to expire yesterday.  

hugovanderbubble's picture

Thebankrun effect has just begun...(in days this will happen in Italy,then Spain and Portugal,Turkey,Hungary,Romania, Albania,Serbia) and in few months in Belgium ,France...

Welcome to III WW


Fiduciary System = Crashed.


Wonder what the SNB will do tomorrow...MORE PEG at 1.20 when the real demand is 1.00 or 0.90 EUR/CHF?

Keep manipulating Central Banks- Everyone is in gameover mode. 

CDS market and Covered Bonds will explode = INSTITUTIONAL and COUNTERPARTY and LEGAL RISK ON MODE

swissaustrian's picture

EUR/CHF has been plunging since 11 am GMT on Friday all day long. Somebody knew in advance. It's not going to take long until we're back at 1.20

IridiumRebel's picture


Cdad's picture

Too late.  The announcement of this disasterous decision was all that was needed.  Now everybody has a good clean look at their Eurozone/banker masters. 

Isn't Central Planning fun?

mickeyman's picture

For the first time I feel lucky that I have nothing to put in the bank.

magpie's picture

No big deal.

They only negated their own banking union scheme with deposit insurance. Move along.

Matt's picture

Deposit Insurance: If the bank's deposits are less than 10 percent of liabilities, we confinscate 10% of all deposits.

hugovanderbubble's picture

SHIBOR will skyrocket

CHINA is in serious troubles

NoDebt's picture

And now the ECB "backstop" gets a reality check, I think.

SillySalesmanQuestion's picture

The ball is rolling and everyone is fair your back jack.The banks and goverments interests will trump yours every time...


swissaustrian's picture

Limited downside in the short term due to the floor at 1.20 vs EUR.

It's gonna take a lot of pressure before the SNB folds and let's the CHF go up.

Short EUR/USD is probably going to be more profitable in the short term.

hugovanderbubble's picture

Short Draghi, Long Zerohedge

youngman's picture

What I think is bigger is that some EU banker just pissed off some very bad Russian dudes...and they do not like to get screwed....and they get even....